03 September 2013 11:12 [Source: ICIS news]
LONDON (ICIS)--The European ethylene monthly contract for September has been fully confirmed at €1,260/tonne ($1,658/tonne), up by €50/tonne from August, following support from a second seller on Tuesday.
The initial settlement was agreed between an integrated consumer and a main producer. The main producer had also followed the settlement with a pure consumer.
The second buyer had also reached the same number with another main manufacturer.
The second seller said it had followed the settlement with three other consumers.
Although confirmation from these consumers was still pending at the time of writing, there was enough support to sufficiently confirm the September contract number.
One of the settling buyers said it was “a good compromise” between the feed increase and the downstream situation.
The second settling seller said: “The key thing was that we needed merchant buying support and broad acceptance.” It considered the increase of €50/tonne a reasonable number, taking into account the average feedstock increase over the last month, plus a risk premium – linked to recent heightened upstream volatility.
The feeling among settling parties was that an agreement needed to be reached as it was already 3 September.
One of the sellers said that “the uncertainty is there to stay”, and there was a need to monitor the situation during September and take action in October, if necessary.
The second settling seller said a larger increase was needed for the September propylene monthly contract price than for ethylene - taking into account the gap between the two.
The settlement is agreed on a FD (free delivered) NWE (northwest European) basis.
($1 = €0.76)
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